Tokens: The Future of Money in the Age of the Platform

Tokens

Tokens

The Future of Money in

the Age of the Platform

Rachel O’Dwyer

First published by Verso 2023

© Rachel O’Dwyer 2023

All rights reserved

The moral rights of the author have been asserted

1 3 5 7 9 10 8 6 4 2

Verso

UK: 6 Meard Street, London W1F 0EG

US: 388 Atlantic Avenue, Brooklyn, NY 11217

versobooks.com

Verso is the imprint of New Left Books

ISBN-13: 978-1-83976-834-7

ISBN-13: 978-1-83976-835-4 (UK EBK)

ISBN-13: 978-1-83976-836-1 (US EBK)

British Library Cataloguing in Publication Data

A catalogue record for this book is available from the British Library

Library of Congress Cataloging-in-Publication Data

Names: O’Dwyer, Rachel (Lecturer), author.

Title: Tokens : the future of money in the age of the platform / Rachel O’Dwyer.

Description: Brooklyn : Verso, 2023. | Includes bibliographical references and index.

Identifiers: LCCN 2023021466 (print) | LCCN 2023021467 (ebook) | ISBN 9781839768347 (hardback) | ISBN 9781839768361 (US EBK) | ISBN 9781839768361 (UK EBK)

Subjects: LCSH: Cryptocurrencies. | Digital currency. | Blockchains (Databases)

Classification: LCC HG1710.3 .O38 2023 (print) | LCC HG1710.3 (ebook) | DDC 332.4—dc23/eng/20230602

LC record available at https://lccn.loc.gov/2023021466

LC ebook record available at https://lccn.loc.gov/2023021467

Typeset in Sabon by MJ & N Gavan, Truro, Cornwall

Printed in the US by Maple Press

For Ted

Contents

Introduction

1. A Bit of Cheer

2. Money Talks, Tokens Track

3. Programmable Butter

4. Money, but Let’s Make It Social

5. Eat the Rich

6. Trust in the Code

7. Outside of Borders

8. A Celestial Cyberdimension

9. ‘When You Live in a Shithole, There’s Always the Metaverse’

Acknowledgements

Notes

Index

Introduction

It’s a thing in a tiny circle shape … and it’s like gold … and you pay for it … and … pfff!! C’mon! you know what money is, don’t you?

Ted, aged four

The hotel off the Vegas strip is called the Tropicana. The carpets are the undefined brown of melted Neapolitan ice cream. When it gets warm they send up the smell of decades of stale cigarettes. I’m here for the Money20/20 Conference. In 1995 the Cypherpunks, the group that all but invented Bitcoin, stayed here for Defcon. They planned a meet-up in the lobby before something called ‘Hacker Jeopardy’. I wonder if the Tropicana used to be great. Or was it always a dive? Can history happen in a place like this?

In the evenings I hang out in another hotel, the Venetian, with anthropologists whose universities are paying their way. We drink a famous cocktail with a desert flower in it. We wander the streets of Little Venice, with its indoor canal and its artificial sky and its real goldfish. We sit at a pool terrace and argue about crypto while a giant singing frog serenades us from the water. In the morning I get up early and walk the strip to the conference venue. At 8 a.m. it’s already sweltering, a dry, candyfloss heat at the back of my throat. The only other people awake are cleaning the footpaths or on their way to a service shift. There are escalators and moving walkways on the street. There’s piped Muzak from everywhere and nowhere. It feels like a giant outdoor mall.

It’s 2015. The hallways at Money20/20, the world’s largest fintech expo, are full of middle-aged men dressed like Bill Gates circa 1995 and a younger cohort dressed like Mark Zuckerberg, a collision of old-school finance and Bitcoin evangelism. These delegates are exhaustively male, and at every bathroom break I share a conspiratorial smirk in the mirror with whatever woman is at the sink beside me, breezing in and out while, outside, men squirm in line and miss the free cookies in the breakout zone. There are stages everywhere where CTOs pace, shilling ‘cookies for the real world’, or the ‘robots in the sky’ that will make credit decisions in the near future. An Israeli child prodigy who needs a stool to see over the podium showcases his smart contract locks for Airbnb. Below us is an exhibition centre the size of a football pitch. The sounds of 8-bit slot machines drift up from the casino on the ground floor.

At the far end of the expo, I stop at a small booth manned by an Irish man in late middle age. He has a soft, avuncular presence that’s out of step with the swagger all around us. I suddenly feel a bit homesick. His company sells phone credit, or ‘airtime’, he tells me. A buyer can log on to their website, buy airtime for a mobile operator in another country, and choose the phone number they want to send it to. ‘People can use our website to top up somebody else. Abroad, or …’ So what’s a phone credit company doing in a fintech expo? What does buying airtime have to do with the future of money?

In inflation-ravaged Zimbabwe, airtime had begun to act as a de facto currency. Instead of taking a top-up code and using it to add credit to their phone, users started to text these codes to others as an informal means of payment. Sometimes they were cash – shops that had once given small change in sweets and condoms began, instead, to give out phone credit slips. Sometimes they were a token of affection – boyfriends sending minutes to their girlfriends. Sometimes they were remittances, a safe way to send wages home. Gradually, vendors emerged as cash-in and cash-out points, selling the phone credit and buying it back for a small fee. Some of these suppliers acquired loans on the back of the credit they accumulated. Airtime became … money. Well, moneyish.

Knowing this, I ask the man if his company is for international remittances. They are using phone credit as a way to send money back home without actually sending money – right? Phone credit is cheaper and faster to send than money via Western Union. And you don’t even need a bank account, just a phone number. ‘Is this money?’, I ask. I feel rude posing such a direct question. ‘Ah … hmm, well …’, he says. He’s apologetic, like he, too, feels it’s rude that he can’t just level with me. ‘I mean, not exactly, but …’ – and he winks.

I tell the anthropologists about the wink over lunch. Anthropologists are big on winks, it turns out. There are different meanings wrapped in a wink, I’m told by Taylor Nelms, who is studying alternative currencies in Ecuador. The wink says something. A wink is deliberate, directed at a particular person, and used to get a message across that won’t formally register with others.¹ Winks are part of an established code. Winks are layered with social meaning. The anthropologist’s job, Taylor says, while the others around the table nod knowingly, is to catch these ‘winks’ and uncover their meanings. In the context of a fintech expo like Money20/20, when so much of the talk is hot air, I can see the point of a wink. This wink said something like: ‘I can’t say this out loud or readily admit to it because to do so would be to totally overhaul my business model and grapple with fund-transfer regulations; but yes, between you and me, we both know that this is to all intents and purposes a new kind of money, one that is issued and underwritten by a phone company.’

This book is about things that are almost but not quite money. Things that are money-ish – money with a wink and a nudge.

At various points in history, tokens circulated alongside ‘real’ money: as a way to shore up grey markets; to trade against stored assets; to pay wages for everything from jury duty to sex work; to grant the bearer access to secret societies; to pay for wars and infrastructure; to remember; to credit; to keep account. Under industrial capitalism, money – the state-backed money that we use to pay our taxes – largely took over. Tokens didn’t disappear entirely, but they were driven underground, into games, gambling, gifts, charity, student union bars, and onto the Silk Road. Now tokens are returning and multiplying. Maybe money as we know it was only ever a blip?

Money is being replaced by online tokens. By tokens I don’t just mean the NFTs that drove headlines in 2021, but all the ways in which digital platforms are issuing new kinds of money-like things, from airtime to loyalty, gift vouchers, game tokens, and customer data. Tokens are now used to turn invisible stuff into assets, to pay wages, to track purchases, and to programme and specify the terms of financial access and inclusion. To offer a few examples, Amazon, a retail conglomerate, pays some Mechanical Turk workers in Amazon Gift Cards. Meanwhile, its streaming site, Twitch, is denominated in ‘Bits’, an in-channel token that acts as payment for streamers on the site. Online games, from EverQuest to Eve Online, trade in multiple virtual currencies that have real-world value. Coined tweets and digital memes are sold for thousands. The Chinese super-apps WeChat and Alibaba, with legacies in gaming and online retail, operate the payments systems that are used by virtually all Chinese citizens. The apps support online and in-store purchases, gameplay and virtual gifting. In turn, the data produced by these activities is used to underwrite credit. M-Pesa, the largest banking and mobile payments system in the Global South, is a formal version of ‘airtime trading’, in which mobile phone credit acts as informal currency. It is also predominantly owned by Vodafone – a mobile network operator.

Many of the companies issuing these tokens have a legacy in social media, gaming, and communications – not money. Most don’t even have a financial licence.

But tokens are also lively and subversive. Users online and on the ground remake them to be paid in informal economies, to communicate, to protest, and to reimagine money. Since the 2008 financial crash, there has been an upsurge in experiments with tokens, from local exchange trading systems (LETS) to time banks. In 2021, meme economies on Reddit drove an attack on Wall Street. Gig workers, streamers, gamers, and sex workers still find ways of transforming online gift cards, wish lists, skins, and gaming tokens into liquid cash. Tokens are coloured by dark subreddit humour, gamified like e-sports, memed like a viral TikTok.

Some of the questions this book will explore are: If money is shifting to online tokens, who controls the shape these will take? What does it mean when online platforms become de facto banks? What new types of control and discrimination emerge when money is tied to specific apps, or actions, or online identities? How are tokens creating new value streams for virtual and physical assets, from tokenised bullion to consumer data, GIFs, and land in the metaverse? How are tokens a regulatory sleight of hand, driving exploitation in the gig economy and the fintech space? What is the balance of power between the state and the platform when these tokens are issued and redeemed, and how does this play out in different contexts? And how might online subcultures, activism, and internet art be spaces for reimagining what money could be, now and in the future?

What Is a Token?

There is a widespread sense that tokens are an internet-native phenomenon, something that surfaced along with the Bitcoin whitepaper and surged with the Covid-19 pandemic. It would be more accurate to say that new tokens rework a range of practices that have always ghosted the ‘real’ economy. In 7500 BC, Neolithic tokens emerged alongside the development of agriculture. The first tokens responded to a need to store and trade goods collectively. Clay was fixed into simple shapes representing commodities – quantities of grain, oil, livestock, and human labour.² These tokens were not only the first example of accounting; they were also the first example of written record-keeping. They were made to keep track of things. Later, the clay tokens became exchange media in their own right. They conjured the ownership of real things in the real world.

Tokens are a value-transfer layer. They can capture the value in things that are intangible, like digital memes, moments in time, and famous people’s farts. But just as often, tokens are a way of allowing solid things that are unwieldy and generally ‘illiquid’ to enter the market. This is true of tokenised soy listed on the blockchain in 2023, just as it was true of Mesopotamian grain tokens nearly 10,000 years ago.

Archaeologists uncovered more tokens from 5000 BC Athens. Surviving accounts suggest they were used in democratic processes – for allocating seats, for voting and paying jury duties, and for making sure these processes were fair and transparent.³ But in 2009 the Bitcoin whitepaper outlined a new kind of token, where users did not need to trust in one another, or the state, or a bank. Instead, they would ‘trust in the code’.⁴ State-backed money might be replaced altogether by so-called ‘trustless’ tokens, the whitepaper suggested – and so might government, with cryptographic tokens used to vote and pay for services.

This idea was popular with the Cypherpunks, an anarchist list on the early internet that believed in ‘a technological solution to the problem of too much government’.⁵ They developed many of the technologies that eventually became Bitcoin. ‘Trust in the code’ appealed to libertarian capitalists who wanted to switch out the state for smart cities in the Nevada desert; but it was also attractive to anarchist socialists, some of whom wanted to use crypto to build a better society. (These two groups and their preoccupations often bleed together.) As Athenian tokens demonstrated, tokens have always played a role in politics. But whereas these ancient tokens were designed to complement the democratic process, today there is a sense that smart tokens and smart contracts might replace politics altogether – that the right token might stand in for the messy business of human cooperation.

Throughout history, tokens have littered the edges of the economy, where markets fade to grey and then to black. For the most part they were privately issued – an extra-legal sleight of hand. Spintriae tokens found in ancient Rome may have been used in brothels or for gambling, where official coinage was forbidden.⁶ In other moments, tokens circulated alongside official money – as a way to meet a shortfall in official coinage, to boost local economies, or as a means to pay wages or finance wars when there wasn’t enough real money available.

While tokens do most of the things that proper money does – store value, buy things, and pay wages – the agents issuing them may claim, like my fellow countryman at Money20/20, that they are not really money at all. As something that is ‘not quite money’, tokens blur the hard edges between legitimate and illegitimate work and legitimate and illegitimate transactions. With tokens, someone is ‘not really’ a vendor or an employer, just as someone else is ‘not really’ working. Unlike the sex worker or the babysitter or the cleaner, who do parts of the same job for money, a housewife’s work is ‘not really’ work at all. It is just what good wives and mothers do; the lack of a wage proves it. Players mining axolotls and gathering herbs in online worlds are not working to feed their families; they are just playing a game. A streamer in a hot tub on Twitch is ‘just chatting’, and if other users choose to send her a token, then it’s all good. But it isn’t money.

This plausible deniability benefits the big players. It allows companies like Amazon to employ people without formally being an employer and to process payments without being a bank. It allows a start-up to issue tokens that are securities or Electronic Trade Transfers in all but name, but sidestep regulation. For a moment in 2019, it even looked as though this grey area might allow Facebook to issue a private token with more clout than the US dollar. Tokens benefit platforms, then, but they also play a role for precarious workers eking out a living on and off the internet. Streamers and camgirls turn online ‘gifts’ from patrons into money. Gamers use skins as collateral for online gambling. Students bet on an NFT of a pair of virtual Nikes in the hope of turning one month’s rent into three. Extremists are paid in subscriber tokens to share their conspiracy theories when many traditional processors have frozen them out.

Tokens are not just value; they communicate more than the terms of an exchange. They also joke and bond and troll. In a twist that evokes the strange ‘bragging rights’ of NFTs, royal tokens called jetons royaux in medieval France had a value that was tied to their iconography more than to their named exchange value or weight in gold. They carried an insider language – different layers of meaning wrapped in symbols – that most people who encountered them couldn’t decipher.⁷ If you could, it meant you were somehow in on the joke.

In the 1990s, anthropologist Viviana Zelizer explored how general-purpose money was ‘earmarked’ and transformed into special-purpose tokens throughout the nineteenth and twentieth centuries.⁸ Before then, much of the sociology of money, from Marx to Simmel, took the view that money reduced every exchange to a transaction and every ‘thing’ to its price. Zelizer showed that while money calculates, it is nonetheless a deeply social technology. By changing the function or the appearance of general-purpose money, a simple payment could be changed into a lover’s keepsake, a treat, a gift, or a bribe.

As an image search of ‘Bitcoin’ proves, tokens are clearly coded to say ‘money’: ‘a little gold thing in a circle shape’, as my four-year-old, Ted, put it. But they were also capable of communicating more than their exchange value. This is particularly true when these tokens circulate via group chat and social media. People use payments apps like Venmo and WeChat Pay not only to send money, but to joke with their friends, troll celebrities, and even harass ex-partners who have blocked them.⁹ In online games, tokens like skins and emotes (a kind of animated reaction) are de facto currency, but they can also be used to flex, insult, or celebrate. Bored Ape and Friends With Benefits NFTs are investment tokens, but they also codify membership to an elite group.

Unlike ‘commodity money’, which is worth its weight in gold or silver, one definition of tokens is that they are a medium of exchange that is worth more than whatever they’re made of. The token is not supposed to be valuable for what it is in itself, in other words, but because of what it represents. This link between representation and so-called ‘real value’ is not only the biggest question surrounding the nature of money; arguably, it’s the biggest question surrounding meaning since the early twentieth century. The link between representations and things is what key questions of language, art, and value boil down to. This question reared its head when Western countries abandoned the gold standard, and when artists decided to designate mass-produced objects as ‘art’, and when poststructuralist philosophers challenged the relationship between words and things. But it is clearly also in play when we try to understand today what makes a token of an Elon Musk tweet ‘valuable’, or a token of a Shiba Inu internet meme popular.

Users are social with tokens – and platforms are in the business of monetising social interactions. As cash goes digital and social media platforms begin to process payments, the ‘real money’ is often in the data on how digital tokens are circulated, transferred, and spent. Increasingly, this data is used to profile consumers, fine-tune logistics, or underwrite credit and risk. Platforms also repackage this transactional data for the state, which uses it to profile and survey citizens. What strategies – from reclaiming cash, to money-burning, to Bitcoin laundering – have users evolved to keep their tokens a secret?

Tokens confer identity and access. In fourth-century BC Athens, tokens stamped with inscriptions functioned as passports, guaranteeing safe passage or favoured treatment. They were credentials. Tokens found in the Roman city of Palmyra, meanwhile, seem to have been used to grant access to exclusive feasts and gatherings.¹⁰ In Ancient Rome, tokens issued privately by patrons bestowed free swag – meals, gifts, alms, wine, hospitality, admissions to games and public spectacles. Medieval alms tokens singled out the ‘deserving’ poor, giving them access to items of basic sustenance like bread, wine, and charcoal. Such tokens provided credentials (‘you, the bearer, are worthy’) and access (‘this is what you get’).¹¹ Today, platforms are competing to issue the token that will act as a digital passport for users, rolling together payments, permissions, and credentials.

Tokens also constitute contracts, capturing an agreement between a host and guest, a creditor and debtor, a suitor and their intended, or a bank and a depositor. By transforming or limiting the liquidity of everyday money, tokens could be programmed to curb the economic freedoms of particular social groups: scrip tokens for workers that could only be spent in the employer’s own store; store credit for a wife; vouchers and food stamps for the poor. Tokens can thus also be a way of attaching special conditions to payments. They can bring spending, eating, parenting, and, well, living in line with the issuer’s objectives. Not just value, then, but values. In the United States, for example, food stamps cannot be used to purchase alcohol or cigarettes or pre-cooked meals for your family. In the past, users found creative ways around these terms and conditions. But this is no longer always possible. Tokens are now programmable: rules are ‘hard-coded’ into exchange by way of smart contracts or software. Tokens are habitually tied to identity, to loyalty, to citizenship and refugee status, to employment, to life choices and social standing. This kind of tokenised authority affects some more than others. What values are written into tokens? And who writes this script – the state or the platform?

Technology is never neutral. Who shapes it and what it does have political consequences. As Langdon Winner noted, our ‘artefacts have politics’.¹² Over time, as a technology moves from the shiny foreground into the background, these effects are fixed, even forgotten. Sometimes – particularly in moments of breakdown or unrest – these politics come back into view. Arguably, the financial crash of 2008 was one of these moments. People began to ask how money was made and might be made differently. Money was broken. How to fix it? A hum of experiments with alternative currencies, from basic income to babysitting circles, grew into a din: tokens with no leader; tokens that support local communities; decolonial tokens to repay centuries of inequality; tokens coined to account for things that are commonly external to the real economy, like care for others, or care for the environment; central-bank digital currencies managed by the state.

More or Less

As Clare Rowan and her co-editors point out, application of the word ‘token’ to this range of practices is so broad it’s not always useful.¹³ Tokens – from ether to Bits to NFTs – are for paying, but they also capture assets, access, bonds, identity, contracts, surveillance, control, prestige, and power.

Tokens, then, are both more and less than money. They are less because they are not legal tender. They usually have a limited functionality, making them less liquid than general-purpose money. They can be redeemed only for certain things or only by certain people, in certain places, or at certain times. But tokens are also more than money. A token can be a game, a passcode, a ticket, a social tie, a keepsake, a bribe, a secret message, a gift, a promise, a vote, an ownership stake, a joke, a meme, an art, a flex, a bet, a law, another token. Tokens deal in more than money. Tokens blur the lines between the market and the social, but they also show us where the lines are drawn in a society – between money and intimacy, work and play, artifice and authenticity, legitimate and illegitimate financial activity, and representation and value.

Tokens are not money. But by exploring their past and present we might begin to glean what money is, and what it might be in the near future.

The chapters that follow probe this ‘more and less’. When I finished writing them, I had a better knowledge of the history of tokens and a speculative take on the future of Web3 – but I’m not sure if I was any closer to saying what tokens or money were exactly, or even how they were distinct. These stories follow the winks and the blurred edges, not to draw hard lines once and for all – because we can’t. Values cannot be squared away, put to a vote, or written into a smart contract. This is what keeps them interesting.

1

A Bit of Cheer

In 2012 I was involved in a campaign against zero-hours contracts in the university where I worked. In the aftermath of the financial crash, my employer was careful to keep wages low for adjuncts and avoid anything that might later be used to claim employment rights. I carried a similar teaching load to a tenured academic, but for that I was paid in a semester what my permanent colleagues took home each month after tax. And I felt lucky. In some other universities, or so the whispers went, temporary staff were now being paid in multi-store gift cards, book tokens, and Amazon vouchers.

By such a token, money can be ritualised as a gift and distinguished from other payments, wages, or remittances. Transformed in this way, money is no longer payment due, but becomes, as sociologist Viviana Zelizer described it, a ‘bit of cheer’ or some ‘little thing’.¹

The gift card is also a way of paying without appearing to pay, from a legal perspective. As something other than a wage that registers on the books, the work it compensates can fade from view.

Amazon Gift Cards are not only a common form of payment for adjunct lecturers, foreign remittances, and Christmas bonuses, but also for informal online work, topping the wish lists of influencers, streamers, and cam models on sites like Chaturbate, Twitch, and OnlyFans. Amazon Gift Cards are tax-free and highly liquid and can be redeemed for anything in the Amazon store – which is to say, for just about anything. Gift card exchanges and resale forums appear online for trading and/or cashing a gift balance out. In some instances, Amazon Gift Cards denominated in dollars even trade above par on eBay and the dedicated Reddit forums. In countries where the local currency is unstable, being paid in Amazon dollars is a coup – an arbitrage that benefits both parties.

Amazon even pays its non-US and non-Indian Mechanical Turk workers exclusively in Amazon Gift Cards. These workers receive not a physical card that can be transferred, but a redeemable code that can only be spent on the site and only by the named party. Many of these workers live in areas that Amazon delivery does not reliably serve. Allegedly, some workers find ways around this problem by buying things for others at a discount and getting paid in bitcoins.

Here the gift card is ‘scrip’ – a wage paid in a token that is issued by and can only be redeemed through the employer. It was once common enough to pay workers in food, coupons, tokens, or trade checks. These tokens could usually be exchanged only for goods held by the company, in a special worker’s store for example, including those goods the worker had toiled to produce – the coal you had mined, say, or the fruit you had picked. The token kept the flow of wages and profits in a closed loop. It made sure no value escaped the system.

In the 1800s and 1900s, laws known as ‘Truck Acts’ and ‘Store Orders’ forbade the payment of workers in anything but legal tender, with no ‘scrip, coupons, punchouts, tokens or trade checks’.² These acts were repealed in the UK in 1986, ostensibly to pave the way for electronic transfers. Today, scrip wages are once more a common feature of the gig economy, where gift and store cards act as piece wages for hidden work.

The problem is, if you are paid in the boss’s own token, they alone get to decide how it’s used and how much it’s worth. The worker is accountable to the employee’s valuation process and subject to their terms of redemption. Universities paying workers in gift cards is ‘precarious’, in that it offers no contract; but scrip is precarious in another sense, as in ‘at the pleasure or discretion of another’. These tokens let platforms do as they please.

Another example of this scrip is the issuance of Bits by Twitch, the Amazon-owned streaming platform. Viewers can purchase Bits with dollars and donate them (or ‘cheer’ them, in the vernacular of the platform) to streamers on the site. A hundred Bits can be purchased for roughly $1.40. Streamers can redeem these Bits for 70 per cent of their purchase price, while Amazon takes a 30 per cent cut.

For Twitch, Bits are a way of capturing value from content on the platform, but they are also a regulatory sleight of hand, a way of employing workers without a contract and processing payments without a financial licence. For streamers and users on the platform, though, these tokens can also be a way to express themselves and bond with others. Even more importantly, they are a loophole into the grey market, a way for workers to get paid for marginal and/or extra-legal work.

A popular ASMR streamer called Foxenkin is wearing animal ears and whispering seductively into a microphone. Her room is low-lit, like the seedy glow of a monitor in the dead of night. There’s the obligatory convention of teddy bears lined up on a bed in the background, including a near human-sized specimen with an ESC key on its stomach, mansprawling across the frilly duvet. The technical setup includes two Neumann condenser microphones positioned shoulder-width apart and a binaural microphone with two silicone ears, engineered to give the auditory impression that the streamer is speaking from inside the viewer’s head.

ASMR (autonomous sensory meridian response) consists of psychoacoustic effects designed to produce a tingling sensation in the listener, that ‘shivers down the spine’ feeling when something looks or sounds particularly beautiful. It’s popular on YouTube, and so popular on Twitch that it has its own dedicated channel. Many enthusiasts fight to distinguish the tingles